Prepare a complete statement of cash flows using the direct method.Note: Amounts to be deducted should be indicated with a minus sign. Forten Company's current year income statement, comparative balance sheets, and additional information follow.For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers,(3) all purchases of inventory are on credit, and (4) all debits to Accounts Payable reflect cash payments for inventory.SalesCost of goods soldGross profitOperating expenses (excluding depreciation)Depreciation expenseOther gains (losses)Loss on sale of equipmentIncome before taxesIncome taxes expenseNet incomeAssetsCashFORTEN COMPANYIncome StatementFor Current Year Ended December 31Accounts receivableInventoryPrepaid expensesTotal current assetsFORTEN COMPANYComparative Balance SheetsDecember 31EquipmentAccumulated depreciation-EquipmentTotal assetsLiabilities and EquityAccounts payableLong-term notes payableTotal liabilitiesEquityCommon stock, $5 par valuePaid-in capital in excess of par, common stockRetained earningsTotal liabilities and equityAdditional Information on Current Year Transactions$ 146,40034,750d. Paid $51,725 cash to reduce the long-term notes payable.e. Issued 3,900 shares of common stock for $20 cash per share.f. Declared and paid cash dividends of $52,900.$ 652,500299,000353,500Current Year$ 109,375$ 70,90086,910296,6561,350455,816143,500(43,625)$ 555,691$ 67,14172,200139,341181,150183,75058,500174,100$ 555,691(19,125)153,22543,850Prior Year$ 87,50064,625265,8002,175420, 100122,000(53,000)$ 489,100$ 135,67571,550207, 225164, 2500117,625$ 489,100a. The loss on the cash sale of equipment was $19,125 (details in b).b. Sold equipment costing $88,875, with accumulated depreciation of $44,125, for $25,625 cash.c. Purchased equipment costing $110,375 by paying $58,000 cash and signing a long-term notes payable for thebalance.

Statement of cash flows is one of useful financial statement being prepared in business. It shows…

Answered: Prepare a complete statement of cash…

Prepare a complete statement of cash flows using the direct method. Note: Amounts to be deducted should be indicated with a minus sign.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 48CE

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